Stocks and Dollars

By Gary Townsend:

After Thursday’s close, JPMorgan (JPM) disclosed in its 2Q2012 10-Q after-tax losses of $800 million, stemming from corporate hedging operations. A slight delay in the regulatory filing had suggested that there might be a problem, which this afternoon’s market weakness may have anticipated.

The company attributed the losses to a trader in its London-based Chief Investment Office, part of its corporate segment. And while this particular trader made a lot of money for JPM, his success in recent quarters reportedly earned him the enmity of several London-based hedge funds. These took what appear to have been coordinated positions against him, resulting in fair value losses of as much as $2 billion.

Mistakes were made. JPM recently implemented a new value at risk model (VAR) that underestimated and understated the firm’s risk. The company has returned to the prior model, which it deems superior. In its conference call, the company says

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By A. I. Houriani:

Microsoft’s (MSFT) multi-market penetration business strategy has given it a place in my equity portfolio and the portfolios I manage. Microsoft has been a leading provider to the business markets, where it accumulated much of its vast wealth, but it has recently taken very strong and aggressive steps to penetrating the consumer markets.

Microsoft is no longer only the company who creates Microsoft Office and our operating systems; it has become much more than that. They’ve realized there’s an enormous consumer market, relatively untouched by them, which can vastly accelerate their future growth. In response to this, we’ve seen a shift in Microsoft’s products and services; moving away from being created solely for functionality to being created for usability.

They’ve realized the absolutely enormous mobile, tablet, and e-book markets which they have begun aggressively penetrating. The new Windows 8 platform will be Microsoft’s key in performing a successful multi-market penetration

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By Helix Investment Management:

Stock markets are often prone to irrationality. History has shown us that stock prices can often diverge from fundamentals in both directions. We believe that Fossil’s (FOSL) stock price has diverged from its fundamentals, setting up a long-term buying opportunity.

Fossil’s stock sank after the watch and accessory maker reported its first quarter 2012 results and offered guidance that was weaker than expected. However, we feel that the more than 37% plunge in the stock was an overreaction, and we outline our bullish thesis below. Before we do that, we will provide a brief overview of Fossil’s quarter and its guidance. For the record, the financial figures and management commentary that we will provide in this article will be sourced from either Fossil’s earnings conference call or its first quarter 2012 earnings release, unless otherwise noted.

Q1 2012 Results & Guidance: Is There a Silver Lining?

Fossil reported its first

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March Q1 2012 results of movie theater operator/owner and real estate developer, Reading International (RDI) were impressive, illustrating another quarter of growth in revenues, operating income and operating margin vs. prior year. A very strong series of films during the quarter not only heated up the screens and filled seats at Reading’s many cinema chains but also helped sell a lot of high-margin popcorn and soda.

Historical background on Reading, now a $254MM LTM revenue, but only a $124MM market cap company, is available in this past Just One Stock interview and periodic progress of Reading’s many cinema and real estate activities can be tracked in these other Seeking Alpha articles on Reading. Despite the company’s consistent delivery of operating performance and its large cinema market shares in Australia (#4), New Zealand (#3) and the United States (#11), Reading still lacks coverage by even a single sell-side entertainment, consumer non-durable,

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By Jessica King Holden:

The biotech sector attracts a certain type of investor, one that is often not afraid of a little educated speculation in the stock market. In horse racing, a good wager involves investigating a horse’s race history, its physical attributes, its unique talents, its training and the ability of its jockey. Other factors considered include the length of the race and the competition in the field. Of course odds, speculation and “gut feelings” play a role as well. When considering success in the biotech sector is often a race to the finish line with a successfully approved drug, the analogy isn’t much of a stretch. So in the race for biotech success, which is the company with the best combination for my wager? Isis (ISIS).

Isis has had its share of promise unrealized in its history, dropping from its $20 share price days. Yet to get a successful drug to market,

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By Steven Bulwa:

When evaluating a stock’s potential value it is essential to find a group of its peers – relevant comparisons – with which to establish a benchmark for valuation analysis. Not all companies are valued the same way by investors. The most obvious valuation criterion is profitability and profitability and is reckoned very differently in different industries. This is always a function of competition unless there is some other force at play beyond the free market, like government intervention.

For opportunity I was looking at two companies in the natural gas engines and systems space whose shares have both fallen almost 50% in recent months, but both seem to lack the level of profitability to be compelling investments. Both Westport Innovations (WPRT) and Fuel Systems Solutions (FSYS) have found ways to grow their revenues significantly in recent years but with anemic margins and profitability. The competitive dynamics of this industry may

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By Rockstone:

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“The most valuable commodity I know of is information.” (Gordon Gecko in “Wall Street” by Oliver Stone)

Commodities have experienced a renaissance after the bursting of the internet bubble at the end of the 20th century. The new and long-term upward trend began with most commodities in late 1990s and already lasts nearly 15 years. During this time, most commodity prices manifold strongly. The following table presents the maximum price increases of selected commodities since 1999:

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Indeed, these were all pretty formidable price increases (except of natural gas) – however, also frightening at the same time. Formidable of course for investors who diagnosed correctly and timely the start of the bull market in commodities now sitting on luscious profits potentially chilling the champagne now. Yet simultaneously frightening, because what if the boom has come to an end? Are those formidable profits on the verge

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By Dividend Growth Machine:

Stock portfolio diversification is a contentious topic among investors. On the one hand, there are those who argue that a portfolio should be concentrated on a small, highly selective group of stocks (less than 10 stocks, perhaps as few as 4 or 5). These few stocks are considered to be the investor’s best ideas and can be monitored closely and frequently. On the other hand, there are those who argue that a portfolio should include a fairly large number of stocks (about 20 or 30, perhaps 50 or more). These stocks may provide broad diversification across and within sectors while reducing the portfolio’s volatility. I think each approach is justifiable and can lead to investing success, although it may depend on how one defines success. Regardless of the approach an investor chooses to follow, I think it is critical to evaluate the role of diversification in meeting the investor’s goals.

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